A guide on how to avoid pension scams

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With the cost of living having increased, people may be more worried about their financial situation – potentially leaving them more vulnerable to pension scams. We have some tips on how these scams work, how to spot the warning signs of pension scams, and how to help keep your pension savings safe from scammers.

What is pension scam?

The aim of pension scams is to trick you into handing over your pension savings. This could involve you transferring your pension pot into a non-existent or high-risk scheme or being persuaded to release some or all of your pension pot.

Scammers often try to tempt their victims with offers of better returns, one-off opportunities or early access to their pension savings. These offers turn out to be empty.

The average pension scam is believed to involve over £75,000 of savings. For some, losses may be less than £1,000. For others, losses can run into hundreds of thousands.

If you fall victim to a pension scam, it’s likely you’ll find it very difficult to get your money back.

How pension scams work

Pension scammers can be very convincing, developing techniques to draw people in. Known scams include:

• Luring you in with the promise of ‘higher’ or ‘guaranteed’ returns, perhaps through investments like overseas property and hotels, renewable energy bonds, forestry, parking, storage units, art or even cryptocurrency.
• Telling you that you can access your pension savings early through a loan or loophole. With this type of scam, you could be hit with a double blow: not only losing your pension savings but facing a high tax bill if you access your pension plan before the current minimum age of 55 (although the minimum age is rising to 57 from 6 April 2028).

These scams can hit you at any age or stage of life, whether you’re paying into a pension plan or taking money from one.

Pension scammers often prey on people’s anxiety. They may promise higher returns to savers or offer pensioners the prospect of extra money. This might sound especially appealing to someone who’s worried about their financial situation while the cost of living is high. 

Research from the Financial Conduct Authority (FCA) last year found a quarter of people would withdraw pension savings earlier to cover their living costs. So with inflation still high, more people may be likely to say yes to a scammer offering to give them early access to their pension money.

Warning signs of a pension scam

A pension scam often starts with an out-of-the-blue email, letter, direct message on social media or phone call (pensions cold-calling was banned in 2019, but scammers may still do it). The scammer may describe themselves as a pension adviser or pretend to represent a government agency, legitimate financial services firm or well-known personal finance expert. 

Scammers also post ads online, although measures to tackle scam paid-for scam ads will be included in the UK government’s Online Safety Bill, which was carried over in the Queen’s Speech back in May 2022.

Regardless of how you are approached, warning signs highlighted by The Pensions Regulator include:

• Phrases like ‘free pension review’, ‘pension liberation’, ‘loan’, ‘savings advance’ or ‘cashback’.
• Offers of guaranteed or high returns from unusual, unregulated or overseas investments, offering no consumer protection – It’s worth noting the investments usually require you to transfer your pension savings into a new scheme, and a scammer claiming to be an adviser may take multiple fees along the way. Investments that are only available after a transfer could be a sign of a possible scam.
• Help to release upfront money from your pension plan before the age of 55.
• Pressurised sales tactics that refer to opportunities being ‘time limited’ or ‘one-off’.
• Complicated investment structures – For example, you could be ‘advised’ by a scammer to invest in a bond held by a pension scheme. Due to the investment structure, you may pay charges for the pension scheme and the bond. The bond may be provided by a company connected to the scammer.

Pension scammers can be clever and extremely convincing, and scams can and do happen to anyone. So you don’t need to be embarrassed if you have come up against a pension scam. Knowing the signs of a scam, understanding what to do if you’re not sure something’s genuine and talking to others about your experiences could help you avoid becoming a victim in the future.

How to avoid your pension savings being scammed

We’ve described some of the phrases and offers that should put you on your guard, especially when you are contacted out of the blue. It’s also useful to follow these five simple precautions against pension scams.

1. Don’t be rushed into anything. If you’re pressured into making a quick decision, there may be something wrong. Always take your time to do some research.
2. Don’t just take their word for it. Scammers may give convincing answers to your questions or tell you about websites or phone numbers where you can check their information. Rather than be sucked in by this apparent openness, do your own research online, using sources other than the ones they recommend.
3. Check the FCA’s Financial Services Register. If the person or firm isn’t listed there, you won’t have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service. And check if there are any non-UK addresses involved if you’re dealing with an individual or company. Sometimes, a person providing advice could be with a registered firm in the UK but is actually giving advice in the name of an overseas company that’s not FCA-registered.
4. Consider getting financial advice about any pensions change. If you don’t have a financial adviser, you can find one on Unbiased. You can check if a financial adviser has been authorised by the Financial Conduct Authority (FCA) at FCA.org.uk.
5. Brush up on the latest pension scams. There are useful guides on ScamSmart and MoneyHelper, while the National Cyber Security Centre (NCSC) has information on how to keep your data and devices safe.

If you suspect you’ve been approached by scammers, report it quickly to the FCA online or on 0800 111 6768. And if you’ve lost money to a scam, you can report it to Action Fraud online or on 0300 123 2040.

Staying safe online with Standard Life

Are you a Standard Life pension customer? Don’t forget that you can contact us via secure message through our online servicing. You can find out more on our website. But keep in mind this is just one of the ways you can get in touch with us. You can visit our support page for FAQs and other ways to get in touch.

We’ll never call you and ask you to log in to your account or send you an email asking for security details or other confidential information.

Also be assured that keeping your data safe is a top priority for Standard Life. We have multiple technical controls in place along with strong business processes and staff training to help us do this.

And we have resources to give you more information on keeping your money safe from scams (for example, we’ve got details of phone numbers and websites to look out for, as they might be involved in scams).

The information here is based on our understanding in July 2023 and shouldn’t be taken as financial advice.

A pension is an investment and its value can go down as well as up and may be worth less than was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.

Standard Life accepts no responsibility for information in external websites. These are provided for general information.